On 2 August 2022, the Australian Securities and Investments Commission (ASIC) has again announced an extension of the transitional arrangements to certain exemptions applying to foreign financial services providers (FFSPs) for a further 12 months. The arrangements now expire on 31 March 2024.
Transitional exemptions
Both in the past and currently, FFSPs have been able to avail themselves of the need to hold a fully fledged Australian financial services licence (AFSL) or a foreign AFSL, under certain relief exemptions, such as the ‘limited connection’ relief and ‘sufficient equivalence’ relief. These avenues for relief were due to expire on 31 March 2023 and be replaced by the foreign AFSL regime and further passporting exemptions.
However, in 2022, and because of the effects of COVID-19, the then Liberal Government introduced a new Bill in Parliament to provide new exemptions in place of the abovementioned. These would be called the ‘comparable regulator’ and ‘professional investor’ exemptions. These exemptions would not be subject to an expiry period, but would exist on an ongoing basis for FFSPs. The Treasury saw this approach as necessary to improving conditions for foreign direct investment into Australia post COVID-19, in financial services.
However, owing to the 2022 federal election, the Bill unfortunately lapsed and FFSPs faced an uncertain period, post 31 March 2023.
Further extension
ASIC has now issued the ASIC Corporations (Amendment) Instrument 2022/623 to delay the expiry of the transitional arrangements a further 12 months, to 31 March 2024. This allows FFSPs relying on the relief abovementioned to continue to do so with certainty for a further 12 months.
What’s to come?
It is expected that ASIC and the Treasury will consult further on the Bill in order to provide more cemented regulatory relief for FFSPs relying on an exemption (or those that seek to) by 31 March 2024. ASIC have reported that this does not affect FFSPs currently operating under a foreign AFSL, and that otherwise, the regulator will continue to hear applications for individual relief from FFSPs on a case-by-case basis.
The above post is merely general commentary on developments and is not legal advice.